Japan’s real estate market offers a unique blend of modern and traditional housing options, from sleek luxury apartments in Tokyo to centuries-old machiya townhouses in Kyoto. Furthermore, Japan’s strong rule of law and property rights protections make it a safe bet for foreign investors.
But the path to owning a slice of this diverse real estate pie often begins with navigating the country’s housing loan system. If you are a foreigner and not a permanent resident or citizen of Japan, getting a housing loan to purchase or invest in real estate can be challenging.
In this article, we will explore the options available for foreigners looking to secure a loan to purchase real estate in Japan.
Is Permanent Residency Required for Foreigners to Get a Housing Loan?
Foreigners who’ve obtained permanent residency in Japan enjoy an unrestricted stay with the liberty to work across sectors.
It’s a privilege earned through a rigorous screening process, barring a few exceptions for holders of highly-skilled visas, and typically requires a minimum of ten years of residence in Japan.
It’s important to note that many Japanese banks and financial institutions list “Japanese nationality or permanent residency” as a key criterion for housing loan applications.
But what if you’re a foreigner without permanent residency? We’ll explore alternatives and solutions to this question below.
How to get a Housing Loan without a Permanent Residency?
Securing a housing loan in Japan might seem complex for foreign investors without permanent residency. However, the real estate market in Japan is more accessible than you might think. There are viable avenues to navigate this landscape successfully.
Here are a few ways foreigners without permanent residency can get a housing loan-
1. Have a Japanese Spouse as a Guarantor
Some financial institutions provide loans to foreigners without permanent residency if their spouse, either Japanese or a foreigner with permanent residency, acts as a joint guarantor.
As application requirements and evaluation criteria vary depending on the financial institution, it is recommended that you consult with a representative of a financial institution in advance.
Note that the interest rates for foreigners without permanent residency tend to be higher than the standard rates, so check the applicable interest rates when consulting with financial institutions.
2. Use a Bank from Your Home Country
If a bank from your home country has a branch in Japan, obtaining a loan from there may be possible. With banks from your home country, it is easier to check your past loan history, and even if you run to your home country during repayment, it is easier to track you down.
Even if you can’t get a loan from a Japanese financial institution, you may still be eligible for a loan from a bank in your home country.
However, keep in mind that if the interest rates from your home country apply, you could face fluctuating interest rates. This means that sudden changes in your home country’s economic situation and rising interest rates could make repaying the loan more challenging.
Note that few banks offer this service, and they are mostly limited to Hong Kong or Singapore citizens.
3. Consider Loans for Foreigners with no Permanent Residency or a Japanese Spouse
What if you don’t have permanent residency in Japan and neither of the aforementioned options is available? Although rare, a few banks offer housing loans to foreigners without permanent residency in Japan, even for those without a Japanese spouse or a spouse with permanent residency as a guarantor.
One of the few banks in Japan that offers loans to foreigners without permanent residency is SMBC Prestia. SMBC Prestia is a subsidiary of Sumitomo Mitsui Banking Corporation, one of the largest banks in Japan.
What sets SMBC Prestia apart from other banks is its commitment to providing loans to foreigners. They have a team of specialists who focus on providing services to non-Japanese clients, and they also have English-speaking staff to assist with the loan application process.
Additionally, SMBC Prestia offers a range of loan options for foreigners, including fixed and variable interest rates and shorter loan terms, which can be beneficial if you are looking to pay off your loan quickly.
In addition to SMBC Prestia, a few other banks offer similar options; however, most require an applicant to have a certain level of Japanese proficiency and tend to have lower maximum loan amounts.
| Bank Name | Interest Rate Type | Main Loan Conditions |
|---|---|---|
| SMBC Trust Bank Prestia | Variable or fixed-term selectable | ・Foreign nationals residing in Japan ・Individuals able to communicate in Japanese or English ・Individuals aged 20 or older at the time of borrowing and under 80 at the time of final repayment ・Joining the specified group credit life insurance ・Annual income of 5 million yen or more in the previous year ・Loan amount: 10 million yen to 500 million yen ・Loan period: 1 to 35 years |
| Suruga Bank (SUUMO-affiliated housing loan) | Variable | ・Foreign nationals residing in Japan ・Individuals able to communicate in Japanese ・Individuals who can join the group credit life insurance ・Individuals aged 18 to 65 at the time of borrowing and under 82 at the time of final repayment ・Others who meet certain conditions ・Loan amount: 100,000 yen to 300 million yen ・Loan period: Condominium: 1 to 50 years (monthly increments); Others: 1 to 40 years (monthly increments) ・Own funds: Ask *In principle, no guarantor required |
| Tokyo Star Bank | Variable or 3-year, 5-year, or 10-year fixed-term selectable | ・Foreign nationals residing in Japan ・Individuals aged 25 to 65 at the time of borrowing and under 75 at the time of final repayment ・Joining the specified group credit insurance ・Individuals who can understand Japanese contract provisions (including those who can understand with the help of a spouse or legal expert) ・Individuals who can prove stable income for at least 1 year as a full-time employee, or as a company executive or self-employed for at least 3 fiscal years through official documents ・Individuals with an annual income of 4 million yen or more ・Loan amount: 5 million yen to 100 million yen (within the property price) ・Loan period: 1 to 35 years |
| Saison Fundex | Variable | ・Foreign nationals residing in Japan ・Individuals aged 20 to 70 at the time of application and under 85 at the time of final repayment ・Having a stable income ・Loan amount: 1 million to 500 million yen ・Loan period: 5 to 30 years |
Estimating Your Japanese Yen Loan Repayments
It is highly recommended to simulate your loan repayments in Japanese yen before actually applying for a housing loan in Japan. Our easy-to-use Japanese Yen Loan Calculator can help you estimate your loan costs in Japan. Simply input the Loan Amount (in yen), Loan Term (in years), and Interest Rate (%), and the calculator will instantly provide you with an overview of your Monthly Repayment, Total Interest, and Total Repayment.
Japanese Yen Loan Calculator
Application Process to Obtain a Housing Loan in Japan
For foreigners, the path to securing a housing loan in Japan is often riddled with intricate procedures, language barriers, and a lack of clarity about requirements. These obstacles can turn an already complex process into a daunting endeavor.
In this section, we aim to address these pain points head-on, offering a clear and concise guide to Japan’s housing loan application process.
1. Required Documents
The application process to obtain a loan for purchasing real estate in Japan as a foreigner is rigorous. The first step is to ensure that you have all the necessary documents.
Here is a list of the required documents:
- Proof of income
- Passport
- Residence card
- Personal stamp (hanko) or signature
- Certificate of employment
- Proof of assets and liabilities
- Loan application form
After you have assembled all the required documents, you should submit your loan application to the bank of your choice. You will then be required to undergo a credit check, and the bank will review your application.
This process can take weeks to months, depending on the bank and your creditworthiness.
2. Estimated Timeline
The estimated timeline for the screening process will depend on the bank and your creditworthiness.
However, the process can take anywhere from two weeks to a few months on average. It is important to note that the timeline may be longer if there are any issues with your application.
Common Issues Foreigners Face When Applying for a Housing Loan in Japan
1. Language Barrier
One of the most common issues foreign applicants encounter when applying for a housing loan in Japan is the language barrier.
Having a good understanding of Japanese or working with a bilingual real estate agent is essential.
The language barrier can make it challenging to communicate with the bank, leading to delays or even rejection of your loan application.
2. Lack of Credit History
Another issue that some applicants encounter is the lack of credit history in Japan. If you do not have a credit history in Japan, the bank may be hesitant to approve your loan application.
In this case, you will need to provide additional documentation, such as proof of income, to demonstrate your creditworthiness.
3. Lack of Guarantor or Collateral
Some banks may require a guarantor or collateral for the loan, which can be challenging for foreign applicants.
In this case, you may need to work with a real estate agent or loan officer who can help you find a guarantor or collateral.
Solution? Work with a Reliable Real Estate Agency!
If you are considering buying a property in Tokyo utilizing a housing loan, Blackship Realty Inc. would be the top choice of assistance.
Blackship Realty is a premier real estate agency based in Tokyo and is the operating company of the Tokyo Portfolio website. All the agents at Blackship are knowledgeable in the local market and proficient in English and Japanese.
Blackship has enough working experience with the banks mentioned in this article, so we can assist you in securing a loan and making your investment successful. To get started, head here or contact us via the contact form below for a free consultation.
Conclusion
Obtaining a housing loan in Japan as a foreigner can be challenging, but with the right preparations, it’s not impossible.
Double-check the latest eligibility requirements with financial institutions and carefully consider which options would be best for you. Working with an experienced real estate agent can make it easier to deal with financial institutions.
We hope this article has provided useful information on obtaining a housing loan for purchasing real estate in Japan as a foreigner.
